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  • Andile Khumalo

Stars Align For Entrepreneurs and Government

Updated: Mar 11


Professor of economics at the Gordon Institute of Business Science and good friend Dr Adrian Saville often makes the point that the one thing business leaders should pray for is a growing economy, because it has the biggest impact on company earnings. I was reminded of this when finance minister Tito Mboweni told us that the economy contracted 7.2% in 2020 and is estimated to only grow by only 3.3% in 2021 and average 1.9% in the following two years.


In summary, if you run a South African business and are looking for growth, either find new markets with better growth prospects or start planning how you will eat other people’s lunch. Or both.

As hard as Mboweni tried to argue that this is not an austerity budget, it is littered with spending cuts. This begs the question: how will we achieve growth if the government is spending less? The answer lies in a partnership programme that has always been with us, though the time for it has never been so ripe, especially for entrepreneurs. I am a big believer in the public-private partnership model in which the government brings its core objective of facilitating development for service delivery and merges this with the private sector’s proven capacity to execute for commercial return. A rare “win – win ” moment in a capitalist world.

Despite the inherent challenges that come with asking the government and business to sit down and cut a deal, I believe the stars are aligning. The government is broke and has no money to invest — but to grow the economy, investment must happen somehow. Business is looking for investment opportunities and sits with cash on the balance sheet or with retirement funds. Add to that the forced working together that’s happened in the past year as we grappled with the Covid-19 pandemic. However, the government needs to be cautious in how it deals with business. There need to be clear broad-based BEE objectives for each project and a clear route to meaningful empowerment, not only in job creation but also in equity participation. This is a unique window of opportunity for entrepreneurs.

There were at least three opportunities I picked up in Mboweni’s speech; astute entrepreneurs should perhaps pay attention to them over the next few years. The most obvious is infrastructure.

The “government has committed to a R791.2bn infrastructure investment drive [of infrastructure repair and replacement]. We are already partnering with the private sector and other players to roll out infrastructure through initiatives such as the blended-finance Infrastructure Fund,” said Mboweni. Clearly, the opportunity for private players is not only in the financing of these projects, but in their execution.

The second opportunity is tourism — probably S A’s most valuable export product. “The Department of Tourism has re-prioritised R540m over the medium term to establish the Tourism Equity Fund “… the fund will acquire equity stakes in existing tourism enterprises and support expansion of operations and development of new operations,” said Mboweni. Clearly, R540m is nowhere close to enough. It needs to be augmented by real capital, and the government needs to stop the poverty mentality and dream beyond its own means. The state owns some of the most valuable tourism real estate in the world, but has failed to craft partnerships that attract sizeable local and foreign investment.

The final partnership opportunity that caught my eye was tucked away as an enabler for infrastructure investment. Mboweni outlined regulatory amendments that will make it easier for retirement funds to increase investment in infrastructure. This is a potential game-changer when it comes to retirement funds increasing their allocations to alternative asset classes beyond the usual equities, unit trusts, ETFs and bonds.

Entrepreneurs would do well to look out for these amendments, and comment on them — they may have a huge impact on the availability of capital in the market. Entrepreneurs have been blessed with a serious economic crisis to solve. Don’t waste it.


This article first appeared on, Sunday Times on 28 February 2021.



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